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What will happen to your real estate business if you die?

by | Oct 14, 2020 | Business Practice

Maybe you inherited your first property from a family member when you already owned a home. Perhaps you decided to buy a house when the markets were low and then quickly realized how lucrative rental properties could be.

Regardless of how you started your real estate business, you likely perform many of the critical tasks involved in operating the company. From collecting rents to being the point of contact if something goes wrong for one of the tenants in your units, you probably shoulder much of the responsibility for the properties that you own and rent out to others.

If you were to die or to experience medical incapacitation, do you have a continuity plan and a succession plan in place to allow someone else to assume those responsibilities?

Business structure and other factors influence what will work for your company

You can’t just add someone to a bank account and assume that that will be all that you need to do if you died or otherwise become incapacitated. The person needs to have the legal authority to handle financial or business transactions on your behalf.

In some cases, a power of attorney or a durable power of attorney might serve this purpose. Other times, depending on how you hold your business and what company structure you used, you may need to take more formal steps to authorize someone to handle business matters on your behalf. You need a contingency plan to allow the company to operate when you aren’t around to handle things. The right steps could even keep your business assets out of probate court.

 Succession planning and workflow information are also important

Authority and access are only half of the concerns about someone stepping into your role at a business. You also need to consider if they will know where to look, whom to interact with and how to access accounts.

A succession plan for your position at the company will include everything from usernames and passwords to various websites to account information and the details of your daily workflow so that someone could perform those jobs and keep the company running.

Talking about the needs of your real estate business, how you hold the properties and the structure of your business with an attorney can help you better plan to protect your company if something were to happen to you.